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tv   The U.S. Middle East Oil Since 1945  CSPAN  December 1, 2019 10:55am-12:01pm EST

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street. extensions of those facilities in every neighborhood on the poles, connecting directly to the customers. >> 8:00 p.m. eastern on c-span2. >> in this national history center congressional briefing, we hear about the role of middle east oil in american foreign policy since the end of world war ii, especially the importance of saudi arabian oil. >> i want to welcome you here this morning. thank you all for coming. my name is dane kennedy. i am the director of the national history center, which is sponsoring this briefing. it is on the geopolitics on middle east oil, historical perspectives on the current crisis. i want to just briefly explain what we are doing here and why we are doing it. this is part of an ongoing series sponsored by the center that brings historical
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perspectives to current issues. the center itself is strictly nonpartisan, and the purpose of the program is not to advocate for any particular policies, but in fact to provide historical context to help inform policymakers and the public as they deal with difficult issues. i want to thank or acknowledge the financial support of the mellon foundation, which makes this briefing possible. theso want to thank assistant director that helped organize this. i want to thank the office of gerry connolly, and also alert you to the fact that you all have index cards on your chairs. this is for questions. as the presenters are speaking, feel free to jot down questions. we will collect them.
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the second half will be devoted to q&a. we will collect the questions and go from there. thank you all for coming. david? david: good morning. thank you for coming. my name is david paynter. er.david paint i have been teaching international history at georgetown university for 30 years. the rest of it is in the flyer. i didn't mention i worked briefly with the congressional research service, the little longer for the department of energy, the conservation of solar, and seven years at the state department and historian's office. in the flyer notes, my research and publications focus on the political economy and geopolitics of oil. i want to say a few words about the importance of studying history. there are many ways of understanding the world. why study history? i would say first, in addition to being intrinsically
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interesting, it expands a range of experience. learning from other people in other times and places forces us to think outside our own experiences in time and place. studying history helps us understand who we are. as individuals, nations, and human beings. second, in contrast to popular usage, history is not just about the past, but also key to understanding the present and preparing to face the future. studying history helps to understand how the world got to be the way it is today and then helps us understand the forces that govern its ongoing evolution. as my late teacher, michael hunt, and his co-author wrote in their 2012 book, "arc of empire," "without historical perspectives, we flounder in mid-oceans, the shore with which we came already out of sight, the land we seek will be on the horizon."
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as one historian pointed out many years ago, history is also a way of learning. the methods historians use to understand the past are the same methods we can and should use to understand the present and to think about the future. i will give you some examples. historians stressed the importance of context, as dr. kennedy pointed out. it matters a lot when and where events and decisions are made. although historians study change over time, they are also sensitive to continuities of change and continuity are very important. historians research the interconnectedness of human experience. they try to see the world rather than focus only on some factors.
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historians place great emphasis on close engagement with facts and primary sources. you have to read a lot. studying history helps us develop the ability to explain and contextualize change over time. studying history helps us develop the ability to identify relevant sources and it helps us distinguish between types of sources and how to support conclusions with evidence. it helps us learn how to evaluate different interpretations and how to distinguish between evidence-based conclusions and unfounded statements. our speakers today will draw on knowledge based on years of research. they will emphasize context. they will examine continuity as well as change. they will analyze
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interconnection among the many factors that influence the geopolitics of oil. they will strive to provide you with a historical perspective on the current crisis. our speakers today are an associate professor of strategy at the u.s. naval war college and dr. nathan citino of rice university. he has written many articles and books on the middle east. the bookt book won prize from the society of historians. it is a great honor. i will turn this over.
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>> ok, so, there is no need to go over my background. i am an associate professor at the u.s. naval war college. obviously, i do need to add a disclaimer. while i am here on an official capacity, none of the opinions i express should be construed as expressing the official opinion of the united states government or its agencies. leaving that aside, this is a talk i give to my students, regarding the global oil industry. i will try to keep it to 10 minutes. the aim of this talk is to give you an overview of how the oil industry operates as informed by the study of history and the second point, to explain how oil influence u.s. policy and strategy since 1945.
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the first point, oil is different from other commodities. for most commodities -- i will give you a brief discussion of macro economics. the aura, i'm not an economist. i'm not even an economic historian. but you need to know, for most commodities -- let's imagine shoes. this is always the example i give. the supply of shoes is shaped by the demand for shoes. if there is high demand, you will produce shoes until the supply exceeds the demand, at which point you cut back on supply. that is straightforward. oil does not operate under those conditions. demand for oil is inelastic. that is a fancy way of saying if oil is two dollars a gallon for three dollars a gallon, you are still driving to work. it does not do a whole lot to affect demand over the short term. the most important factor
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shaping supply is not the demand, but rather the price of oil. the price of oil determines whether certain supplies are economical to produce or uneconomical. for instance, if you have a high price for oil, it makes sense to produce oil in canada. at a low price, that makes no sense. i want to stress that the most important factor behind shaping the supply of oil is not demand, but the price. the second point, lots of economists, including nobel prize winners like to tell you that oil is fungible. it is whether or not something can be substituted for another. theoretically, coke is fungible with pepsi. even though i don't know why anyone would drink coke. a lot of economists like to talk
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about oil is fungible. they use the analogy of a bathtub. oil taken from one part of the bathtub is replaceable by oil from the rest of the bathtub. the problem is this is wrong. as anyone who works in the industry can tell you. oil is not fungible because all types of crude oil are not the same. specifically, oil is usually dominated in two ways. it is sweet or sour -- that has to do with sulfur content. or it is heavy or light. depending on its specific gravity. u.s. shale oil tends to be light, sweet crude. as sweet as a mountain spring, as light as a cloud. whereas oil from the middle east tends to be light, but also sour. a high sulfur content. why does this matter?
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it means oil of different compositions cannot be refined in the same facility. if you have a refinery there to produce light, sweet crude, it cannot handle heavy, sour crude. the process of converting refineries can take several months to several years. for that reason, never think of crude oil as being fungible. if refineries are designed to process oil from the middle east, that is all they can handle. they cannot substitute it for oil from the united states or west africa, which has different compositions. different chemical properties. an important fact to bear in mind. oil is expensive to produce, but it is not scarce. i want to stress this. oil is not scarce. how much do you pay for a gallon of gasoline?
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back home, $2.50. i guess it is around the same here, right? think a little bit higher. let's say it is three dollars a gallon. how many liquids in the world can you buy for three dollars a gallon? go to the supermarket. tell me. how much does a gallon of milk cost? how much would a gallon of pepsi cost? petroleum is relatively inexpensive considering how much we use. the important thing to bear in mind, there are high barriers to entry in terms of finding oil and producing it and the economy -- the marginal cost of oil goes down the more you produce. but it is tricky to find and produce oil in the first place. the other point, how much oil is there? if i knew the answer, i would
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not be in the history center, i assure you. generally there are two answers. if you ask a geologist how much oil there is, they will tell you, based on the existing state of technology and how much they know about the world at this point in time, able to view an answer. that answer is only good for that window of time. it is only based on their knowledge at that point in time. that is why geologists every 20 or 30 years will tell you, we only have 30 or 40 years of oil given these rates of consumption. every 30 or 40 years, it turns out we have more oil. that is not because geologists are idiots. geology is not a predictive science. it is there to study the earth's past, not its future. economists are probably the people you need to ask when it comes to how much oil is there.
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they will ask, if you want to know, tell me what the price of oil is. if the price is high, odds are there will be large quantities of oil. if the price is low, that will actually shrink the amount of oil available because it is not economical to produce. the question arises, what is the position of the u.s. government regarding prices? do we want high or low prices? high prices carry severe economic costs for consuming nations. generally, they tend to inhibit gnomic growth and promote inflation. as we have seen since 2013, low prices can cause problems. they discourage efficiency or conservation and will tend to undermine the political stability of oil-producing nations that depend on export revenues. sorry i have to barrel through this.
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i want to sketch out, why is oil significant? why is it significant u.s. policy and strategy? i want to make clear, control of middle east or gulf oil is at the center of u.s. strategy since 1945, but not for the reasons you might expect. most people would think it is significant because we need to for ourselves. strangely, it is not because we need it for ourselves. imported significant amounts of middle east oil in the 1970's, and even then in the 1980's, once western hemispheric production came online, importance of the middle east to u.s. supplies tended to decline. what is more significant, this oil was vital for european and asian consumption. specifically, i want to make
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this clear, the oil is not important for the united states, it was important for u.s. allies. that is a factor probably still continues. in the asia-pacific, basically all u.s. partners and allies rely on middle east oil. supplies field reconstruction in europe and japan after the second world war, discourage them from lying to economic nationalism by developing synthetic fuel sources domestically or grab resources from neighboring countries. we did not want to have a replay of pearl harbor because japan or germany ran short on gasoline. development of the gulf center of oil production for the most part tended to promote price and
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supply stability. which promoted american prosperity after the united states became a net importer of oil after 1948. why is the middle east significant? it is not the amount of oil it produces. lots of places of the world produce a significant quantities of oil. specifically, the united states or russia. what is significant about the middle east is its role in export markets. there is a small consumption within the region relative to how much it can export. the capacity within the middle east. how much they can wrap up production or turn it down depending on under supply or oversupply in the rest of the world. overall, this prosperity, which is fueled by middle east oil, facilitated the containment of the soviet union and its allies,
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and helped win the cold war. i think i have one more minute. what are u.s. aims regarding the oil industry past and future? i would argue there is not a whole lot of difference from what they were in 1945 and today. the most important factor, control over the global oil trade. not control over foreign oil fields. remember, the oil is only useful if you have a market. as long as we control access to those markets -- most important of which is the audit states and the developed world, who tend to be more oil-intensive -- as long as you control access, you don't need to control the oil fields themselves in the producing
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world, which makes relations with oil producers more amicable you ownedwould be if their resources. we want to secure oil for the u.s. and allies at a reasonable cost, which we do by commanding the comments, we tend to be ambivalent towards continental powers, which prefer pipelines. there is controversy over the stream, the russian pipeline from russia to germany, it is not new. the united states traditionally viewed russian oil and gas exports to europe as a threat to u.s. national security because that is a supply that could not be controlled or intermediated by u.s. companies and the u.s. navy.
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we want to make sure oil revenues go to our partners and not to hostile oil producers. that should be self-explanatory. we want to enhance the u.s. economic position in the gulf, if oil producers are selling to u.s. partners and allies and doing so through u.s. companies, even if we are sending dollars to that part of the world, they will need to recycle those dollars using companies that tend to be american or allies. it is a way of recycling those petrodollars. most importantly, we want to prevent the domination of the gulf by any external power. this means, we wanted to have a
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monroe doctrine for the gulf. the carter doctrine of 1980, which was designed to stop a potential soviet a bid to dominated the region and expended by president reagan the following year to include domination by any internal regime, specifically iran. i will leave question in your mind. bearing all i said, does it make sense for the united states to wind up its commitments in the gulf when the overall context that surrounds u.s. engagement is not so different as it was at the end of the second world war? u.s. allies and partners continue to rely on the gulf and control access to that by mediating supplies that travel overseas and controlling access to markets.
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thank you. >> thank you. i am nathan citino from rice university. i would like to thank the national history center for organizing this event and for inviting me. i would like to thank all of you for coming to hear this discussion early on a monday morning. a few weeks ago, on october 11, the defense secretary, mark esper, announced a deployment of forces to saudi arabia. at the time of the deployment, he said, saudi arabia is a security partner in the middle east and asked for additional support to supplement their own defenses and defend the international rules-based order. this statement and the deployment itself gives us an
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entry point in our discussion this morning for talking about the history of the u.s.-saudi relationship and american foreign policy in arabia and the gulf generally. those phrases, like security partnership, or a bargain of security for oil, are frequently used to describe the u.s.-saudi relationship. these descriptions serve to portray that relationship as natural, inevitable, and ultimately as apolitical. historical research by me and other people in the field -- some great work being done -- shows there was nothing inevitable about the u.s.-saudi relationship, which developed over time and in a contingent manner. on the basis of conflict, as well as cooperation, and in a way that generated political controversy in both countries.
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in my remarks, i will give you a sense of the literature by talking about three major themes or topics in talking about the u.s.-saudi relationship. the first has to do with the postwar petroleum order. the idea is the u.s.-saudi relationship emerged not on a bilateral basis, but as part of the system that developed middle eastern oil for fueling western europe and japan after world war ii. would we talk about u.s.-saudi relations, we are not just talking a bilateral relationship, but to the place of the relationship within the larger system, that included major oil companies as well as states, oil transit states -- countries whose territory was crossed by oil on its way to
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market and oil-producing states -- that included governments in the region and great powers, like the united states and great britain. major u.s. corporations formed the arabian american oil company to develop saudi oil and gold -- and built the trans-arabian pipeline across four countries to transport oil from the gulf to the mediterranean. aramco-saudi relations were in 1950 a deal struck 50/50 sharinga arrangement. those relations were also based on conflict overpayment and ownership of the company, over the housing promotion and of saudi workers, and aramco's commitment to economic development in the kingdom.
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u.s. recognition of and support for israel complicated this relationship and isolated saudi arabia within the arab world. a second set of topics has to do with the politics of reform, domestic politics within the saudi kingdom. the basic recognition or argument historians make is, from the beginning of this relationship in the 1930's, 1940's, the u.s. government and american oil companies were involved in domestic saudi politics. strikes among aramco workers in 1945, 1953, and 1956 latitude demands for reform and nationalization of aramco by the saudi government. the government suppressed these strikes and arrested or exiled leaders.
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groups such as the national reform front, formed out of these uprisings. labor leaders and other dissidents regarded the u.s. airbase and aramco itself as constituting a colonial presence in saudi arabia. this was the era of anticolonial nationalism, decolonization in the arab world of the authority, influence, and popularity of the egyptian president. a movement for a constitutional monarchy, supported by workers, by some government employees, and even some members of the ruling family, was defeated in the 1960's. the u.s. government closed ranks behind the king, who opposed the constitution, and in 1964
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deposed his half-brother. a third -- this is the most or body ofd of, scholarship on the relationship -- has to do with the 1970's and the period subsequent. the scholarship that examines the 1973-74 oil embargo, its consequences, and the way the relationship was reconstituted following that embargo. prior to 9/11, the most serious crisis in the relationship came when saudi arabia joined other oil producers in an oil embargo against the united states, imposed for american support of israel in the 1973 war.
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the arab oil embargo came at a time when tight global oil supplies gave producing governments leverage over major companies. the result was a major shift in what historians have called the postwar petroleum order. producing states pursued what is sometimes called resource nationalism in the forms of higher prices, demanding a greater share of the wealth produced by the production of oil, and corporate nationalizations. in other words, demanding ownership rights within the companies producing oil within their territories. as a consequence, saudi arabia nationalized aramco in a planned takeover that culminated in the 1980's with the creation of the state oil company, saudi aramco. which has a large presence in
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houston, where i now live. that phrase i mentioned earlier, security for oil, a bargain between the united states where we offer security in exchange for secure oil, that security for oil bargain pertains to the , the period era after the oil embargo. u.s.-saudi relationship was reestablished on the basis of recycling petrodollars, especially through weapons sales produced by u.s. companies to saudi arabia, and saudi arabia's purchase of treasury bonds, helping to fund the debt of the united states, as well as saudi support for anti-communist causes in the cold war, especially support for the islamist insurgency identity soviet union in afghanistan after 1979.
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also in 1979, the u.s. lost its principal ally in the gulf, the shah of iran, to a revolution. the iranian revolution placed emphasis on saudi arabia as a u.s. ally. following the announcement of the carter doctrine in 1980, the u.s. dramatically increased its military presence in the gulf. this encompassed in the creation of the joint task force and later the u.s. central command, as well as the basing of u.s. forces in saudi arabia during the war in the 1980's. hundreds of thousands of u.s. troops were deployed to the region, including saudi arabia, during the gulf war.
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as you might expect, the u.s. troop presence provoked opposition and resistance and opened a new chapter in the saudi opposition against the ruling family and u.s.-saudi relations. al qaeda, which carried out the 9/11 attacks, included saudi dissidents such as osama bin laden and veterans of the anti-soviet campaign in afghanistan. most recently, saudi leaders saw the u.s. as an ally against iran and its regional proxies. saudi-iranian rivalry has entered a new phase as these countries compete across the region, a region destabilized by the 2003 u.s. invasion of iraq
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and its affects in yemen, iraq, syria, lebanon. the rivalry has escalated and intensified violence in conflicts that are framed in sectarian terms, but are really about regional power. prioritizing the conflict with iran has led saudi arabia to mute criticism of u.s. policies towards the iranian-palestinian conflict, even as the current administration has adopted israel's position on issues such as the status of jerusalem. it has split the gulf cooperation council. the alliance of arab gulf states with saudi arabia and other states seeking to isolate qatar. the recent attacks on oil tankers raise questions about
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whether the saudi-iranian governments will seek to de-escalate their rivalry and the implications of this development for the u.s. campaign of maximum pressure on the iranian economy through sanctions. as in the past -- if we are using the past as a guide -- rather than an apolitical security partnership, conflicts over regional power, the place of oil in the global economy, and domestic politics in both countries will shape or determine the contours of the u.s.-saudi relationship and u.s. policy going forward. i will conclude my remarks there and look forward to your questions. [applause]y much. >> you have your cards. if you have questions, we will
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take questions through the cards rather than the hand raising. i wanted to also do a question about opec. opec seems to dominate a lot of people's minds. you see people talking about the opec embargo in 1973. there was no opec embargo. it was the arab producing countries. i find in statistics that people still -- the eia lists opec countries and non-opec producers. how important is opec anymore? i teach a course at the graduate and undergraduate level, and we often talk about, was there an opec era? is it still on? does it only last a short time?
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how could you guage opec's gauge opec's power? >> please forgive me for not mentioning this in the top. opec's power, it is greatest when oil prices, ironically, are low. not high. if you can sustain oil prices at a low level for a long period of time, guess what, who controls the largest share of the world's cheap oil prices? who has the lowest cost of production? those tend to be producers in the middle east who dominate opec. there may not have been an opec oil embargo, but there have in price increases to compensate for the decline of the u.s. dollar following the shock in 1971, the delinking of dollar to gold.
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most importantly, oil prices were too low. it was unfair to producing nations. they were giving a nonrenewable resource at such a low price. if you hadthat sustained low oil prices, the middle east will become more important, because it makes no sense to produce anywhere else. ironically, low oil prices tend to increase opec's power. high oil prices may benefit opec in the short term. fourfold enjoy a fou increase in oil revenue over the 1970's. that created a long-term problem for them. every boom lays the seeds for the next bust, and vice versa. an oil boom, having high oil prices leads to finding new sources of oil, which leads to ultimately leads to low oil
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prices, and the cycle repeats itself. how isi assat is ess the role. because of the sustained high prices, not just in the early 2000's, but in the 1970's and 1980's, a new source of oil global markets that did not exist before hand, perhaps u.s. shale oil, which undermines the buts not a normal threat undermines the control of the price of oil through production increases and cuts. >> i apologize to whoever wrote this question. they asked the same question i did. whatever happened to opec as an independent actor and shaping the geopolitics of oil? does it remain a force independent of the u.s. in the west? >> as a historian, i can give a historical context for opec. opec was established in 1960.
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at the time it was established, the united states, the eisenhower administration viewed opec as a kind of less dangerous outcome, or less threatening placing oil in an arab nationalist context. i mentioned earlier the egyptian leader, this great figure of pan-arab nationalism, the fear . the fear was that oil produced in the gulf would be used for political purposes, to pressure the united states, especially in its policy toward israel in in other contexts. but opec emerged as an oil producers club, both arab and non-arab states. that included states like iran, venezuela in the western hemisphere.
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opec, to the great relief of american leaders in 1960, took oil out of the kind of context of arab nationalist politics and made it this producers club where the focus was on bargaining over prices and other kinds of technical issues. a second kind of contextual point to make is because of the embargo we were talking about of 1973, 1974, many developing countries whose economies are were based on the production of primary materials, raw materials, viewed that embargo as a kind of model for trying to force a reform or restructuring of the global economy in a way that in their view would be more just and more equitable to those kinds of developing countries that produce primary materials.
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this was known. some of you may know it in the history of the united nations as the new international economic order. it was an agenda of developing states. there are many reasons that didn't come to pass, why countries that produced products other than oil couldn't follow in the path or in the footsteps of opec and the arab oil-producing states. it had to do with u.s. foreign policy and opposition to that kind of agenda. it also had an awful lot to do with what was talked about at the beginning, the fact that the structure of the global oil industry, the nature of oil as a global commodity, is different from other kinds of primary commodities like minerals. and others. >> a question here. someone asked about -- explain in a little more terms slack
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capacity, or excess capacity, and how it applies most to middle east oil in general and then maybe you can talk to how it refers to saudi arabia in particular. in swing work producer. >> power in the oil industry comes from not just the ability to produce oil, but the ability to produce oil on demand, that you can increase or decrease production as circumstances may require. in the u.s., the longest time,
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that role was played by texas. it could increase or decrease production depending on u.s. or global commissions. that had shifted largely to the middle east. the kingdom of saudi arabia. as far as we can tell, it has pretty much all of the world's slack capacity. slack capacity is the difference between what you produce and what you could produce. if theoretically tomorrow, if there was a problem elsewhere in the world, say venezuela descending into anarchy, there was problems in iraq, nigeria was having its systemic issues, countries in the gulf, specifically saudi arabia, can increase production to compensate for the shortfalls elsewhere in the world. that gave through the swing producer. that power of increasing oil production to compensate for shortfalls anywhere else in the world lies not just within opec, but largely within the gulf.
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as far statistics for how much slack capacity in the world are pretty opec at this point. opaque at this point. it's no more than 5 million barrels a day. it used to be about 10 million barrels. now it is 4 million to 5 million barrels. it is a closely guarded secret. >> i don't have much to add other than to say that a swing the importance of saudi arabia as a swing producer is undeniable. i think that saudi foreign policy also benefits from the perception that that is the case. we relate the more small and medium-sized producers coming coming online and are going to add to supply and may drive down price, at least
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to an extent. the other factor is the tremendous production in the 10 last 10 years or so in north america in developing new so-called tight oil that is available now in north america that has two some extent undermined that role as swing producer. to some extent undermined that role as swing producer. >> that was another question, and the role of u.s. shale oil production. some have argued the shale industry is now the new swing producer, not so much because it has a lot of excess capacity, but it is easy to bring on and off-line. it is on land. you have small producers. when you have slack demand, you lay people off. they can go on and off. what would you say to that argument? the impact of shale oil production in the u.s. on the global balance of power in the oil industry? >> the issue is there is a time lag.
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if there is an immediate shortfall like two or three or x million barrels flies out tomorrow, who will replace the oil tomorrow? it is not going to be shale producers. that will take at least several months to years to produce that. i happen following this in "the wall street journal" and other places. the u.s. produced a lot of oil. shale oil transformed the global energy market. but shale companies are in incredibly poor investment. basically all have negative cash flows. it is not a profitable business to be in. it benefited from a period of keep the money, low interest rates, allow companies to produce oil at will, and make money through volume rather than the price of oil because it was low. this meant profitability was very low.
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what we have seen in the shale patch over time is the small companies are increasingly going out of business or having access to capital restricted. larger companies have taken their place. these larger companies do not have the same interests in maximum production and choose to make their money not through volume, but through the higher a higher sustained price of oil. they have interests elsewhere in the world and want to see higher priced oil if at all possible. i would argue shale has again, yes, it has transformed the global oil industry by creating large new sources and as countries like and other brazil countries. that's not the same as saying they have global slack capacity. the production is what you have at any given point in time, it is on production.
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the question is, how much do you hold back production in order to compensate for any shortfalls anywhere else? i would stress the only country in the world that has the ability through simple turning of valves to increase production is saudi arabia. even if the russians had played, today, opec is not really opec. it is just saudi arabia and russia. supposedly russia has been trading production cuts in order to stabilize oil prices, but as a russia oil analyst told me, it is not clear the russians are trading oil production so much as having a natural decline in the productivity of their oilfield. we're the only country that is decreasing production and raising it as circumstances may
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require, the kingdom of saudi arabia. u.s. shale is not comparing in that same regard. >> i would throw one issue that out there that is hanging over the global oil industry, i'm a climate change. the description i gave of the history of aramco and the way a plant naturalization in saudi arabia acquired what became saudi aramco in the 1980's, many as many of you know and have been reading. saudi aramco is going to be offered as a publicly traded company, at least a couple percent of the company will be offered for public shares. in part, we are reading that this is part of a strategy by the saudi kingdom to hedge against the possibility of and perhaps the reality of decrease and demand for hydrocarbons as people become more concerned about carbon induced climate
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change. >> a couple of people asked questions about the saudi-iranian conflict. a few things about not only the saudi-iranian conflict, but the relationship of the u.s. and to saudi arabia, as well as iran, and how it has changed over time. >> i would sort of expand a bit on the comments i made. in the late 1960's, the sort of principal imperial power in the gulf for many years for more than a century had been great britain. britain withdrew from the gulf, . in this coldt of war context, saw a power vacuum that increasingly relied on saudi arabia and iran, at that time ruled by the shah of iran,
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as sort of the pillars of american foreign policy in the gulf. the shah was much more powerful regional state at the time. when the iranian revolution occurred in 1979, this posed a tremendous difficulty and challenge to the united states and its foreign policy in the gulf, certainly to the extent saudi arabia took that up, a that role or took on a greater responsibility as an american ally in the gulf. the saudis at that moment were experiencing their own difficulties and challenges. as some of you may know, there was a seizure of a grand mosque in mecca by islamist militants. also in 1979, an uprising in the shia innority
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the eastern province in the eastern part of saudi arabia. some background to that relationship among the u.s. and saudi arabia. and iran. >> the question came up. somebody get another card up here. you seemed to imply earlier the conflict is less over religion and more over power. >> that is my stance. i think that historians and other analysts look at that relationship much more as one over regional power over two kinds of broad coalitions of states and regimes in the middle east. one that is sort of at least aligned with the u.s., israel,
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other pro-u.s. regimes, and those that are aligned with iran, including syria, other states that are opposed to the first coalition. the emphasis on secretary and shia, is aunni vs. kind of political strategy that i think was seen as beneficial by parties on both sides of that conflict in mobilizing political support, and establishing transnational coalitions of supporters. for iran, for example, seeing lebanon as a valuable ally in hezbollah in lebanon as a valuable ally in the confrontation against israel and the united states would be an example. but also, a kind of political strategy for undercutting the
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sort of democracy movements that we saw during the arab spring in 2011 and which have a history in the region, as i suggested in my remarks about the constitution movement in saudi arabia in the late 1950's and early 1960's. question here. anybody would like to speak about the u.s. role overthrowing in overthrowing the iranian government in 1953 and the long-term implications of that action? either one of you want to touch that one? >> that is an important topic we can approach from a number of different ways. i will say two things. first, the real importance of orktorians' w
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uncovering what happened and getting on the public record of what happened. recently, the u.s. state department produced a new volume of the foreign nations of the united states series, the official documentation of u.s. foreign policy. that offered a much more transparent and complete accounting of the u.s. role in organizing the coup against him that overthrew him in august of 1953. professional historians are doing that important work of insisting that documents be released and be made as transparent as possible for historical researchers and for students. another interesting point about that era is that even before the his overthrow, iran was under economic sanctions. so it's a kind of precedent for the current moment of maximum pressure on iran through sanctions on its economy.
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the reason that iran was, to a certain extent, embargoed so successfully was this was a moment in the 1950's were a handful of major oil companies controlled the world oil industry. that's really no longer the case. it's march more difficult to impose that kind of successful sanctions regime than it was more than half a century ago. there are also buyers like china and other countries who aren't part of the maximum pressure campaign. >> i feel the need to make a point about iran and the coup. i'm not ian iran expert. i'm simply pilfering and irani and colleague's work on this.
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there are a couple of things you need to bear in mind about the coup, which are real relevant to the subject today, important to history and understanding the challenges. point thathat m my colleague told me is the coup in 1953 is trumpeted not by the shah's regime, but the iranian revolution regime after 1979. it was more important to them, as evidence of u.s. perfidy, than obviously anyone before hand. as far as they are concerned, they are the ones who create the museum of the coup in the former u.s. embassy. they are the ones who constantly champion the role of the u.s. as iranian actor in domestic politics, not the forehand. a marginal figure with iran, a member was marginal around domestic politics with foreign revolution. it is a revolutionary regime
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that is appropriating the legacy for political reasons, even though they have absolutely no time for secular democratic politicians in any other circumstance other than a u.s. coup. the second point i am going to make is there is a tremendous decline in iranian perception of the united states before the relation. that ise to the fact forgotten today. it is the so-called status agreement in 1966. what really turned iranians against the u.s. is the notion that americans in iran before americansthousands of and military personnel in iran before the revolution, these personnel would be subject to extra territoriality. which is a fancy way of saying they would be subject to american laws, not iranian loss, that iran was being colonized by the brass, as
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evidenced by this agreement. the status of forces agreement more than the coup of iran that really undermines the perception of the u.s. and americans within iran before the revolution, not the coup. it is an important point to bear in mind, considering under what conditions we want u.s. troops to offer in other nations in the world insisting being subject to american laws, not domestic laws. remember, for all the talk given about president obama's decision to withdraw troops from iraq after 2009 and 2010, the sticking point was not with they would they withdraw? it was a question of, would they be subject to iraqi law or not? they would have extraterritorial rights. this was unacceptable to the iraqis, hence the decision to withdraw u.s. troops.
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those troops. you can argue amongst yourselves whether that was a good trade to make, whether pandemonium could have been avoided if we were willing to choose a different path. but bear in mind, that was the sticking point, just as it was in iran in the 1960's. >> we have a question that goes to another question of the supply/demand balance. daniel talks about that's what drives oil prices. that's what drives oil politics. what is the supply/demand balance today, and what are the factors that affect it? we have a question that mentions, would increased capacity for renewable power in the united states -- how would that change if the u.s. was less dependent on fossil fuels? how would that change u.s. relations with the middle east, especially with the persian gulf? >> ok.
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so the supply/demand balance -- as far as we can tell, there is only one place in the world that is seeing an increase in andconsumption over time, that's east asia. the developed parts of the world are seeing a flatlining demand for oil. they consume a lot, that's not what the demand growth is. if you want growth in the industry, you are looking to sell to east asia and maybe to one day to africa, considering we are still consuming oil when africa can modernize. the question is, who is looking will control access to those markets? that's where the money is made, in terms of future market growth. in terms of supply balance, it's basically the only part seeing any supply growth over the last few years has been the united states because of shale. virtually 90% of the new oil supplies that have come online
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over the last 10 years is u.s. production. so basically, that's it. but bear in mind of course, where are the reserves in the world located? what's the cost of production of those reserves? the bulk of the world's reserves still tend to be within the gulf, which has the lowest cost of production. yes, supposedly venezuela has larger reserves, but they are those reserves are of heavy crude. nobody really wants to invest a whole lot in venezuela today for ancillaryat are only related to oil. the middle east means that even if you have a lot of supply growth in the u.s., they are though supplies are largely being consumed within the u.s. or the western hemisphere. the middle east remains important because of its low cost of production and it is the only part of the world that can
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conceivably in the short to midterm satisfy expanding growth within east asia and south asia. >> i want to thank again the national history center for setting this up. thank you for coming today. thank you. [applause] [captions copyright national cable satellite corp. 2019] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> this is american history tv on c-span3, where each weekend we feature 48 hours of programs exploring our nation's past.
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>> i wanted to tell you i hang my head in shame at the industry particularly what i would say is the very unfair personalized reporting of these fellows. to know thatught opinion because you are going to be disappointed in me down the road if i did not tell you that. i'm just telling you frankly that i think your industry is wrecking all of us. >> well, that is pretty heavy-handed. you can imagine what it was like for the journalist the next day. country.the very disturbing. we are hearing that today. the press is the enemy
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of the american people according to president trump. that is not the enemy of the american people. "q&a," theon museum's vice president of content and exhibit development talks about the tension between american presidents and the press. watched c-span's "q&a" tonight at eight a copy of eastern -- at 8:00 p.m. eastern. >> next, professor timothy shannon teaches a class on colonial era diplomatic ties between the iroquois confederacy of the eastern great lakes region and european settlers. he describes what treaty meetings make have looked like, the role of interpreters, and the importance of exchanging gifts. timothy: all right. welcome, everyone. today, we are going to talk about diplomacy on the early american frontie p

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